{"id":6285,"date":"2015-03-07T08:22:19","date_gmt":"2015-03-07T13:22:19","guid":{"rendered":"http:\/\/olduvai.ca\/?p=6285"},"modified":"2015-03-07T08:22:19","modified_gmt":"2015-03-07T13:22:19","slug":"the-ecbs-lunatic-full-monty-treatment","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=6285","title":{"rendered":"The ECB\u2019s Lunatic Full Monty Treatment"},"content":{"rendered":"

The ECB\u2019s Lunatic Full Monty Treatment<\/a><\/h3>\n

Not Quite Right in the Head?<\/strong><\/h3>\n

The belief that the market economy requires \u201csteering\u201d by altruistic central bankers, who make decisions influencing the entire economy based on their personal epiphanies, has rarely been more pronounced than today. Most probably it has actually\u00a0never<\/em>\u00a0been stronger. It is both highly amusing and disconcerting that so many economists who would probably almost to a man agree that it would be a very bad idea if the government were to e.g. take over the computer industry and begin designing PCs and smart phones by committee, think that government bureaucrats should determine the height of interest rates and the size of the money supply.<\/p>\n

 <\/p>\n

We know of course that central banks are\u00a0the<\/em>\u00a0major income source for many of today\u2019s macro-economists, so it is in their own interest not to make any impolitic noises about these central planning institutions and their activities. Besides, most Western economists have not exactly covered themselves with glory back when the old Soviet Union still existed. Even in the late 1980s, \u00dcber-Keynesian Alan Blinder for instance still remarked that the question was not whether we should follow its example and adopt socialism, but rather\u00a0how much<\/em>\u00a0of it we should adopt.<\/p>\n

The recent ECB announcement detailing its new \u201cQE\u201d program once again confirms though that there is nothing even remotely \u201cscientific\u201d about what these planners are doing. Common sense doesn\u2019t seem to play any discernible role either. Below are the 10-year government bond yields of Italy and Spain. These are actually among the higher bond yields in Europe right now.<\/p>\n

 <\/p>\n

\"1-Italy,<\/a>Italy\u2019s 10 year government bond yield is now below 1.3% \u2013 click to enlarge.<\/p>\n

\n

\"2-Spain,<\/a>Spain\u2019s 10-year yield is also below 1.3% \u2013 click to enlarge.<\/p>\n

 <\/p>\n

Leaving for the moment aside how sensible it is for the bond yields of virtually insolvent governments mired in \u201cdebt trap\u201d dynamics to trade at less than 1.3%, one must wonder: what can\u00a0possibly<\/em>\u00a0be gained by pushing them even lower? Does this make any sense whatsoever?<\/p>\n

 <\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

The ECB\u2019s Lunatic Full Monty Treatment Not Quite Right in the Head? The belief that the market economy requires \u201csteering\u201d by altruistic central bankers, who make decisions influencing the entire economy based on their personal epiphanies, has rarely been more pronounced than today. Most probably it has actually\u00a0never\u00a0been stronger. It is both highly amusing and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,233,282,2151,534,536,954,661,662],"class_list":["post-6285","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-ecb","tag-european-central-bank","tag-monetary-easing","tag-monetary-policy","tag-money","tag-money-supply","tag-qe","tag-quantitative-easing"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/6285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6285"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/6285\/revisions"}],"predecessor-version":[{"id":6286,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/6285\/revisions\/6286"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}